Starting Point Recruitment Limited v Walsall Metropolitan Borough Council
[2024] EWHC 982 (Comm)
Asertis Ltd v Lewis Barry Bloch
24 September 2024
[2024] EWHC 2393 (Ch)
High Court
A company sued someone, but the defendant worried the company couldn't afford to pay his legal costs if he won. Even though the company had insurance, the judge wasn't convinced it was good enough, and ordered the company to pay some of the defendant's costs upfront to make sure he'd get paid.
Key Facts
- •Asertis Ltd (Asertis), a litigation funder, sued Lewis Barry Bloch (Bloch) for breach of director duties, claiming £2,754,170.60 was improperly transferred from Genesis Capital (UK) Ltd (Genesis) to Warren Friedland.
- •Bloch applied for security for costs, arguing Asertis was unlikely to pay his costs if he won.
- •Asertis relied on its loss-making accounts, a revolving credit facility with US Bank Trustees Limited, and an After the Event (ATE) insurance policy with an anti-avoidance endorsement (AAE).
- •The court considered Asertis's financial position, the terms of the ATE policy, and relevant case law on security for costs applications.
Legal Principles
A defendant can apply for security for costs if there is reason to believe the claimant cannot pay the defendant's costs.
CPR 25.12(2) and CPR 25.13(2)(c)
The court does not need to be satisfied on the balance of probabilities that the claimant will be unable to pay; 'reason to believe' is sufficient.
Jirehouse Capital v Beller [2009] 1 WLR 751
The court has discretion to order security for costs, considering all the circumstances of the case (e.g., bona fides of claim, prospects of success, oppressive use of application).
Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] QB 609
An ATE policy can provide some security for costs, but rarely as good as a payment into court. The policy must demonstrably provide some security, and terms allowing easy avoidance of liability are problematic.
Michael Phillips Architects v Riklin [2010] EWHC 834 (TCC)
In assessing ATE policies, the court takes a pragmatic view, focusing on whether the policy provides 'real security'.
Verslot Dredging v HDI Gerling Industrie Vesicherungag A G [2013] EWHC 658 (Comm)
Outcomes
The court ordered Asertis to pay security for costs.
The court found reason to believe Asertis would be unable to pay Bloch's costs if unsuccessful. The ATE policy was considered insufficient protection due to its terms, including broad termination clauses and lack of direct benefit to Bloch.
The security for costs was staged, with payments based on incurred costs and a percentage of costs agreed or approved at a future Costs Management Conference (CMC).
The court expressed concerns about the high level of Bloch's costs and aimed to avoid pre-judging a costs management order.
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